Rural Hospital Recovery Act of 1989

Rural Hospital Recovery Act of 1989 - Directs the Secretary of Health and Human Services to draft and submit to the Congress and the Prospective Payment Assessment Commission, within one year of this Act's enactment, legislation eliminating the differences in average standardized Medicare payments (under title XVIII of the Social Security Act) to large urban, other urban, and rural hospitals while recognizing certain cost differences among hospitals and within diagnosis related groups.

Amends the Medicare program to require the Secretary to pay additional amounts to Medicare-dependent, small, rural hospitals before October 1, 1994, and to critical access facilities thereafter to ensure that their reasonable operating costs for inpatient hospital services are covered.

Establishes an application process for rural hospitals which choose to be treated as urban hospitals by reason of their proximity to urban areas.

Requires the recomputation of Medicare sole community hospital payment rates using the most recent information on hospital-specific costs per case and, if greater, national rather than regional prospective payment rates. Treats hospitals which are located 30 miles or more from other like hospitals, or hospitals which provide inpatient hospital services to at least 60 percent of the residents or part A (Hospital Insurance) Medicare beneficiaries within a 30-mile radius of the hospital as sole community hospitals. Requires the Secretary to report to the Congress by October 1, 1990, on the process by which sole community hospitals may appeal the Secretary's decision not to make a volume adjustment to its Medicare payment.

Establishes the Medicare Geographical Classification/Critical Access Facility Review Board which shall: (1) designate certain hospitals as critical access facilities; (2) hear appeals from rural hospitals which the Secretary determines do not qualify for treatment as being located in an adjacent urban area; and (3) conduct hearings with respect to the Secretary's refusal to consider a hospital to be a sole community hospital. Defines a "critical access facility" as a small, rural hospital which due to its location, prolonged severe weather conditions, or the availability of other hospitals to serve part A Medicare beneficiaries residing in the area must receive additional payments in order to continue to deliver critical health care services.

Extends the regional referral center classification of hospitals so classified as of September 30, 1989, and the Medicare payment rates applicable to such hospitals until the implementation of unified average standardized Medicare payments for large urban, other urban, and rural hospitals.

Amends the Omnibus Budget Reconciliation Act of 1987 to alter the Rural Health Care Transition Grant Program by: (1) extending from two to three years the limit on the provision of grants to small, rural hospitals for modification of their services; (2) permitting the Secretary to waive the hospital grant limit; and (3) increasing and extending the authorization of appropriations for such program through FY 1992. Requires the Secretary to submit a report to the Congress by April 1, 1990, identifying laws, rules, and regulations which prevent rural hospitals from providing innovative patient services.

Directs the Secretary to conduct a five-year demonstration program in five rural hospitals treating the costs of nursing services obtained pursuant to an existing agreement with a nursing school as the costs of approved educational activities for Medicare payment purposes.

Amends the Omnibus Budget Reconciliation Act of 1987 to expand, from four to ten hospitals, a Medicare demonstration program covering additional costs incurred by teaching hospitals in sending their residents to small rural hospitals for training. Extends the permissible duration of such training from three months to two years. Favors projects which provide small rural hospitals with resident physicians for longer periods of time and give physicians from the small rural hospital the opportunity to work or study at the sponsoring hospital. Makes consortiums of small rural hospitals eligible to accept the services of such a resident physician.